Robert R. McCormick Foundation v. Arthur J. Gallagher Risk Management Services, Inc.

Summary

The Illinois Supreme Court held that the common-interest exception to the attorney-client privilege recognized in Waste Management, Inc. v. International Surplus Lines Insurance Co. did not apply where an insurance broker was sued for negligently failing to procure appropriate insurance. The court distinguished the insurer-insured relationship in Waste Management from the parties’ relationship here, which involved an agreement to indemnify the broker’s own negligence and no duty to defend or indemnify the insureds’ conduct. The court therefore rejected Gallagher’s claim to discovery of privileged communications between the Foundations and their attorneys.

Holdings

1. The common-interest exception to the attorney-client privilege does not extend to the circumstances of this case because Gallagher and the Foundations did not have the special insured-insurer relationship, corresponding defense and indemnity duties, cooperation obligation, or aligned interests present in Waste Management.
2. The circuit court erred by ordering the Foundations to produce the subpoenaed attorney-client communications under the common-interest exception.

Questions Presented

1. Whether the common-interest exception to the attorney-client privilege recognized in Waste Management, Inc. v. International Surplus Lines Insurance Co. extends to a negligence action against an insurance broker that had no insured-insurer relationship with the privilege claimant.
2. Whether the Foundations' communications with their attorneys concerning the underlying LBO litigation were discoverable under the common-interest exception.

Disposition

reversed_and_remanded